MATERIALS CONTAINED HEREIN ARE THE EXCLUSIVE PROPERTY OF THE CENTER FOR CHILDREN WITH SPECIAL NEEDS, LLC. MATERIAL MAY NOT BE SHARED, REPRINTED, OR REPRODUCED WITHOUT EXPRESS WRITTEN CONSENT OF THE CENTER FOR CHILDREN WITH SPECIAL NEEDS, LLC

MEASURED GROWTH

HOW IMPLEMENTING A BALANCED SCORECARD

CAN HELP GROW YOUR PRACTICESETH D. POWERS, MBA, MPHCO-DIRECTOR

CCSN: THE CENTER FOR CHILDREN WITH SPECIAL NEEDS

GLASTONBURY, CTWWW.CCSNCT.ORG

SEPTEMBER 2019

Please note, this presentation is intended for educational purposes only and does not replace independent professional judgment. This presentation is not meant to offer medical, legal, accounting, regulatory compliance, or reimbursement advice. Inquiries and questions specific to your organization may be evaluated and discussed outside of the scope of this presentation.

Any specific questions can be directed to the presenter:

Seth Powers: spowers@ccsnct.org

2

Disclaimer

‒ Brief overview of CCSN: The Center for Children with Special Needs

‒ The state of Small Business

‒ Clinical service delivery within a mission-driven organization

‒ Introduction of the Balanced Scorecard‒ Definition & Benefits‒ Understanding Indicators

‒ Balanced Scorecard Utilization‒ Healthcare‒ Small Business‒ Autism Service Organizations

‒ Implementation Tips & Watch-Out Items

‒ Next Steps & Take-Aways

‒ Questions3

Discussion Agenda

By the end of this webinar participants will:

➢ Be aware of the importance of financial vs. non-financial indicators in Mission-Driven organizations

➢ Understand the overall structure, components, and purpose of the Balanced Scorecard

➢ Be familiar with utilization of the Balanced Scorecard within Healthcare settings

➢ Be aware of tips for the implementation of a Balanced Scorecard as well as Watch-Out items

➢ Consider critical questions regarding the organizational fit of a Balanced Scorecard within their practice

4

Objectives

5

About CCSN: The Center for Children with Special Needs

• Since 1994 CCSN has been delivering clinical and consultative support to patients, their families, and their communities both in Connecticut and around the globe

• Based in central Connecticut, CCSN has a staff of roughly 40 employees including: psychologists, BCBAs, LCSWs, OTs, and RBTs

• In 2016 CCSN decided to re-enter the commercial insurance world in an effort to increase access to high-quality clinical care for families in the community

CCSN: The Center for Children with Special Needs

Consultation Division

Educational Consultation & Program

Development

International and Distance Consultation

Government / State

Consultation

Clinical Division

Psychological Evaluations

Transition Planning &

AssessmentsCCSN Behavioral Health (CCSN BH)

Outpatient Therapy

ABA Clinic OT Feeding Clinic

6

Journey with CCSN BH

Organizational Motivation

•Expand Clinical Reach

•Career Diversification

•Meet patient demand

•Revenue Diversification

Planning & Preparation

• Insurance Contracts / Negotiations

•EMR

•Administrative Support

• Insurance Billing

•Marketing Plan

•Staffing support

Launch & Scaling

•Build Pilot

• Incorporate Learnings

•Growth & Replication

•Comprehensive Reporting

While we had many of the clinical competencies, the shift to direct service represented a meaningful change to our existing business model with

administrative, operational, and financial impacts

• Formal definitions vary, but generally speaking small businesses are considered to be those with <50 FTEs which, as of 2015, comprised 92% of all US businesses

• 2/3 of all US businesses have between 1-9 FTEs

7

Stepping Back:A Look at Small Business

• What separates small businesses from mid-sized and large businesses?

• “Resource Poverty” (Welsh and White, 1981)

• Smart, measured, and deliberate growth is critical to propelling all sized businesses to the next stage

❖ Product is King

Exceptional clinical service delivery must be the cornerstone of any healthcare organization….

…But it requires more than just outstanding Clinical care to be successful and ultimately fulfill your organizational mission

❖ For organizations providing high-quality clinical care, there is an equal responsibility to operate with similarly high-quality business planning and administrative models to enable your continued ability to provide exceptional care to your patients and their families

❖ Beyond clinical care, where does my practice need to excel in order to be successful?

8

The Business of Exceptional Clinical Service Delivery

MotivationAddress the needs of our patients and support them in living happy,

fulfilling lives

9

Model for a Mission-Driven Organization

Voelker, et al. (2001)

• In 1992 Robert Kaplan and David Norton published their influential paper introducing the concept of a Balanced Scorecard

• The authors recognized that traditional accounting measures failed to comprehensively paint picture of organizational health

10

The Balanced Scorecard (BSC)

Despite wide-spread adoption among large businesses, use within the healthcare sector has lagged (Voelker, et al. 2001) and the BSC has had limited use within small businesses

(Chow, et al., 1997)

Four Key Domains:

• Financial

• Customer

• Internal Business Process

• Learning & Growth

Adoption within the business community:

• Among large businesses, BSC was one of the 25 most popular management tools

• 63% utilized as of 2011 and by 2010 it was the 6th most popular tool used (Giannopoulos, et al. 2013)

11

The Balanced Scorecard

Martello, et al. (2008)Adapted from Kaplan & Norton (1992)

Limit to 4-5 indicators (objectives) per domain

for a total of 20-25

1. Promotes growth—due to focus on long-term strategic outcomes, not just short-term operational results.

2. Tracks performance—individual and collective results can be tracked against targets in order to correct and improve.

3. Provides focus—when measures are aligned to a few critical strategies, the BSC provides focus on what is important to the company.

4. Alignment to goals—when you measure what is truly important to success, the measures become linked and support each other. Alignment occurs across the organization.

5. Goal clarity—the BSC helps respond to the question, “How does what I do dailycontribute to the goals of the enterprise?”

6. Accountability—individuals are assigned as owners of metrics in order to provide clear accountability for results.

12

6 Organizational Benefits of the Balanced Scorecard

Gumbus and Lussier (2006)

• Reliance on financial measures in a management system is insufficient, as financial measures are lag indicators that reflect the outcomes from past actions. (Kaplan and Norton, 1992)

• Lead indicators are the processes that contribute towards outcomes, referred to as Lag indicators

• BSC based upon cause-and-effect relationships of the financial and non-financial measures derived from company’s strategy (Martello, et al. 2008)

13

Key Concept Leading vs. Lagging Indicators

Outcomes (Lag Indicators)

Lead Indicator

Lead Indicator

Lead Indicator How do lead indicators,

including, intangible assets such as customer relationships,

innovative products, high-quality internal processes, and

intellectual property, drive outcome measures?

14

Financial Indicators:How Do We Meet Our Financial Obligations?

Objective Measurement Target InitiativesIncrease revenue among key

service lines

Measure revenue growth for

ABA, Behavioral Health, and

Physical Health services

Increase top-line ABA revenue by +8%

Increase Behavioral Health revenue by

+3%

Increase Physical Health revenue by

+4%

- Increase digital marketing spend by $250/mo

for Q1

- Limit new Medicaid patients to 15% of total

intakes for next 6-months

- Host Open House for local providers to discuss

available services

Reduce debt load to eliminate

debt-servicing expense

Eliminate short-term debt Eliminate short-term debt over next 12

months

- Increase cash payments on high-interest notes

- Explore re-financing / debt-consolidation for

lower interest rates

Maintain / Improve Payor-Mix Variance to targeted blended

rate across all payors

Achieve targeted blended rate for

clinical services with attention to any

negative variance

- Create reports showing monthly, quarterly, and

annual data to demonstrate trends

- Incorporate payor-mix into necessary clinical

leadership conversations to ensure

transparency

Increase practice profitability Improve net-income with

focus on high-margin services

expansion

Increase net-income by 2% each

quarter for 8% annualized increase

- Invest in marketing higher-margin services

- Monitor discretionary spending

- Re-negotiate overhead contracts (i.e. practice

insurance, janitorial, landscaping, etc.)

How Do We

Look to

Shareholders

(financial

Stakeholders)?

Financial

• Strategy for growth, comparability, and risk viewed from the perspective of the shareholder (or financial stakeholders)

• Financial indicators are generally outcome indicators or lagging indicators.

• Your financial indicators should contemplate critical business items such as revenue, profit margin, cash-flow, debt, and fixed/variable expense management

• This list is not exhaustive and your own financial metrics should inform your Indicators

Financial Indicators

15

Customer Indicators:How Do We Look to Our Customers?

Objective Measurement Target InitiativesMaintain and Improve Patient

Satisfaction Survey

Satisfaction Survey

distributed 2x/yr to all

patients during a defined

period

- Target at least 80% of available

patients/families complete survey

- Aggregate scores improve with each

distribution of survey

- Previous low-scoring questions see

improvement

- Create multidisciplinary team to review and

analyze scores to make recommendations to

broader organization

- Create working groups to focus on problem

areas with specific emphasis on improving these

results

Improve Net Promoter Score

(NPS)

NPS question, "How Likely

Would You be to Refer a friend

to Our Practice?"

NPS score above 75% - Incorporate feedback from Satisfaction Surveys

- Providers actively check on patient satisfaction

within practice and solicit feedback as

appropriate

Increase Internal Referral

Rate

How many new patients are

referrals from current

patients?

Target at least 20% of new patients - Create "Lead Source" field in EMR to capture

referral source

- Deliver high-quality care as measured by

Satisfaction Surveys

How do

Customers See

Us?

Customer

•Creating value and organizational differentiation from the customer perspective

•Customer indicators are generally leading indicators as they influence outcomes

•Requires a clear definition of who your customer is

•Note: you may have multiple customers i.e. patients, families, providers, school systems, insurance companies, state agencies, etc.

Customer Indicators

16

Learning and Growth Indicators:How Do We Continuously Improve?

Objective Measurement Target InitiativesIncrease Conference and

Professional Participation

How many team members

present in professional

forums each year?

80% of professional team members

participate in professional forums

- Dedicated work time for content development

- Financial support for conference attendance

- Mentorship for junior team members (including

co-authoring / co-presenting opportunities)

Increase community

engagement

Facilitate trainings with local

non-clinical groups (i.e. school

boards, daycares, after-school

groups)

Engage 10 such organizations

throughout the year

- Dedicate time for prospecting and with local

organizations

- Develop master-list of organizations that may

benefit from trainings

- Allow for senior and junior team members to

partner to build internal training capacity

Tuition reimbursement

program for employees

seeking professional

development

Number of eligible employees

who participate in Tuition

Reimbursement plan

At least 3% of eligible employees access

tuition reimbursement benefit each

year

- Internal communication regarding availability

of benefit

- Managerial flexibility to work with employee to

accommodate school schedules

Can we

Continue to

Improve and

Create Value?

Learning & Growth

• Priorities to create a climate that supports organizational change, innovation and growth

• Learning and Growth indicators should support future outcomes and therefore are leading indicators

• These will be unique to your organization and will be critical in supporting organizational culture

• Examples could be at the employee-level or at the enterprise level (i.e. introduction of new technology)

Learning and Growth Indicators

17

Internal Business Process:How Do We Ensure Operational Excellence?

Objective Measurement Target InitiativesLead responsiveness How quickly do we contact

families that have inquired

about services?

Respond to all inquiries within 4

business hours

- Dedicate administrative resources to

responding to leads tool

- Document within lead management system

- Develop working group to explore automated

response options

- Monitor disposition of leads, evaluate for

relationship with responsiveness

Staff Retention How much voluntary turnover

do we see each year for high-

performing employees?

Minimize voluntary turnover of high-

performing employees (target 0%)

- Active professional engagement opportunities

- Internal stretch assignments for top

performers

- Targeted mentorship opportunities for top

performing employees

Staff Engagement Annual internal employee

survey

Target improved employee satisfaction

scores with each distribution of survey,

with particular emphasis on historically

low-scoring questions

- Dedicated multidisciplinary team to review

and analyze results with recommendations to

Leadership team

- Support communication channels through

regular supervision meetings (so concerns don't

wait until survey time)

What Must we

Excel At?

Internal Business Processes

• Priorities to create customer and stakeholder satisfaction

• Addresses the key operational questions that your business needs to be successful and are generally leading Indicators

• This could be far-reaching depending on your specific practice so identifying the true critical objectives is foundational to the success for your organization

• Including both Clinical and non-Clinical team members in the development of these indicators is especially important as implementation occurs in both domains

Internal Business Processes

• Healthcare uniquely lends itself to a BSC as organizations operate with a dual mandate to deliver exceptional clinical care along with the need to remain financially viable within an ever-changing landscape

• The dynamic and multi-stakeholder nature of healthcare organizations necessitate innovative implementation of the BSC.

• Within a healthcare setting, Clinical Outcomes represent a crucial 5th

domain (Santiago, 1999)

• Understanding Customer vs. Clinical indicators

Selecting Indicators

• The determination of key performance indicators (KPIs) is foundational for the success of any BSC implementation

• Performance measures should reflect organizational strategic goals and gauge progress towards those goals

18

BSC in Healthcare

Santiago (1999)

Changing the scorecard does not change the nature of the model itself; it reflects strategy.

Voelker, et al. 2001

• The multi-faceted, multi-stakeholder model of many ASD Service Organizations lends itself well to the adoption of the BSC

Common questions faced by many provider groups:

• How do I increase engagement with community members seeking services?

• How do I manage my payor-mix to ensure sustainability?

• How do I attract and retain the best talent?

• How do I know that my staff is receiving the training and support they need to be successful?

• How do we ensure ethical adherence to relevant professional codes (i.e. BACB, APA)

• Should I expand into a new service line?

• Should I open another service location?

19

BSC in Autism Service Organizations

For organizations, especially those whose Founder/CEO/Executive Director doesn’t have a formal business background, the BSC can be an invaluable

tool to help monitor your organization’s overall health

Tips:

• Leadership Buy-In

• Relevance and quality of chosen indicators

• Provide Development & Implementation Time

• Allow BSC to Evolve with Strategy

Barriers:

20

Implementation

The end result should be to have a successful business –not a perfectly built scorecard

Among Healthcare organizations, Implementation ranged from 1-5 years with an average of 2 years (Inamdar and Kaplan, 2002)

• Overcoming New-ness

• “Just another management fad”

• Clinical Buy-In

• Obtaining Executive Time

• Deploying BSC Throughout Organization

• “Fear of Being Measured”

• Burden of Data Collection

• BSC is tool for strategy implementation and not strategy formulation (Inamdar and Kaplan, 2002)

• Perception of over-managementization of a clinical organization

• Imperfection of KPIs - risk of tail wagging the dog

• BSC is a guide and KPIs will require refinement over a period of time.

• For initial implementation, assume that you will have errors in your Indicator/Target/Measurement process

• The BSC is intended to be dynamic and follow your strategy –support the evolution as your business evolves

• Development & Implementation is time-consuming – assess your organization to ensure that you’re in a position to invest the time and resources to execute

21

Watch-Out Items

Internal Questions:

– How do the concepts of a Balanced Scorecard align with how we conceptualize our practice?

– Would the formal implementation of a BSC help our organization realize it’s objectives?

– Could the BSC help to organize existing reporting tools that my organization employs?

– Does our organization have a well-formulated strategy to build upon?

– How will our team members respond to the implementation of a BSC?

Resources:

• Primary Literature:

Kaplan, R. S., Norton, D. P. (1996). The Balanced Scorecard: Translating Strategy into Action. Boston, MA: Harvard Business Review Press.

• Journal Articles – see citations page

22

Next Steps & Take-Away Tips

23

QUESTIONS?

Contact Information:

Seth Powers, MBA, MPH

spowers@ccsnct.org

www.ccsnct.org

860-430-1762 24

Aidemark, L. G. (2001). The Meaning of Balanced Scorecards in the Health Care Organisation. Financial Accountability and Management, 17(1), 23–40. doi: 10.1111/1468-0408.00119

Chow, C. W., Haddad, K. M., & Williamson, J. E. (1997). Applying the balanced scorecard to small companies. Management Accounting, August(1997), 21–27.

Churchill, N. C., & Lewis, V. L. (1987). The Five Stages of Small Business Growth. Harvard Business Review, January(1987).

Giannopoulos, G., Holt, A., Khansalar, E., & Cleanthous, S. (2013). The Use of the Balanced Scorecard in Small Companies. International Journal of Business and Management, 8(14). doi: 10.5539/ijbm.v8n14p1

Gumbus, A., & Lussier, R. N. (2006). Entrepreneurs Use a Balanced Scorecard to Translate Strategy into Performance Measures. Journal of Small Business Management, 44(3), 407–425. doi: 10.1111/j.1540-627x.2006.00179.x

Inamdar, N., Kaplan, R.S. (2002). Applying the Balanced Scorecard in Healthcare Provider Organizations. Journal of Healthcare Management, 47(3), 179–196. doi: 10.1097/00115514-200205000-00009

Kaplan, R. S., & Norton, D. P. (1992). The Balanced Scorecard— Measures that Drive Performance. Harvard Business Review, January-February(1992).

Martello, M., Watson, J. G., & Fischer, M. J. (2011). Implementing A Balanced Scorecard In A Not-For-Profit Organization. Journal of Business & Economics Research (JBER), 6(9). doi: 10.19030/jber.v6i9.2471

Santiago, J. M. (1999). Use of the Balanced Scorecard to Improve the Quality of Behavioral Health Care. Psychiatric Services, 50(12), 1571–1576. doi: 10.1176/ps.50.12.1571

Voelker, K. E., Rakich, J. S., & French, G. R. (2001). The Balanced Scorecard in Healthcare Organizations: A Performance Measurement and Strategic Planning Methodology. Hospital Topics, 79(3), 13–24. doi: 10.1080/00185860109597908

Welsh, J. A., & White, J. F. (1981). A Small Business Is Not a Little Big Business. Harvard Business Review, July-August(1981).

Woodward, H. N. (1976). Management Strategies for Small Companies. Harvard Business Review, January-February(76111), 112–119.25

Sources